Five years ago we reported the discovery of position effect variegation near telomeres in S. cerevisiae. The position effect is manifested as transcriptional repression, or silencing, of genes located near the telomere. These genes are silenced in a mitotically heritable, yet reversible manner. Since that time we have been studying this phenomenon with two long term goals: 1. To develop a better understanding of chromosomal structure at telomeres and learn its relationship to telomere function. 2. To understand the underlying mechanism of mitotic heritability and phenotypic switching that occur in the phenomenon, with the intent that what we learn will serve as a paradigm for position effect at other chromosomal locations, and in all eukaryotes. Over the past four years we have found that silencing at telomeres requires many of the same gene products as those necessary for gene repression at the silent mating type loci of S. cerevisiae, suggesting that they share a common pathway of gene repression. We have defined the parameters that govern the size of a silent chromosomal domain and the means to modulate them. We have developed a new method for examining chromatin structure in vivo and have used it to probe the nature of silent telomeric chromatin. More recently we have made progress in understanding the nature of phenotypic switching in telomeric position effect. It has led us to an appreciation of the cell cycle dependent dynamics of silent chromatin. In addition we have isolated a new set of genes that can suppress telomeric silencing when produced at high levels. One of these genes encodes the RNA component of yeast telomerase. We propose to continue our investigations by focusing on better understanding the cell cycle dynamics of phenotypic switching, and to characterize the new genes we have discovered. We believe our studies in yeast will serve as a model system for understanding related epigenetic phenomenon in humans such as X-chromosome inactivation in females and genetic imprinting, particularly those in human diseases.